Missed the Income Tax Deadline? Here’s What You Need to Know

Missed the Income Tax Deadline Here's What You Need to Know

The tax season can be overwhelming, especially if your tax situation is complex. If for any reason you aren’t sufficiently prepared with all the relevant documents, you may risk missing the income tax deadline. What do you do then?

We’ll discuss everything you need to know if you’ve missed the income tax deadline, including all the penalties involved. We’ll also provide practical steps on what you should do if you missed the income tax deadline and how to prevent the IRS from tarnishing your wages due to unpaid taxes.

What should I do if I missed the income tax deadline?

Firstly, don’t panic. Here’s what you should do if you missed the income tax deadline:

  1. File your income taxes immediately even if the deadline has passed. You may avoid any penalties if you’re eligible for a refund from the IRS.
  2. Pay as much as you can if you owe taxes to reduce penalties and interest.
  3. Use electronic filing options such as the IRS Free File to prepare and file returns electronically.

Can I still file for an extension after the tax deadline has passed?

Unfortunately, you can’t file for an extension after the tax deadline has passed. All extension requests must be filed by the regular due date of your return. However, the IRS grants some U.S. taxpayers automatic extensions of up to 180 days to file and pay taxes due without penalties and interest. These include those serving in a combat zone, living outside the United States, or being affected by a federally declared disaster.

Can I file my taxes electronically if I missed the deadline?

Yes, you can file your taxes electronically if you missed the income tax deadline. The IRS allows taxpayers to file their taxes electronically even after the tax deadline. However, if you owe taxes, it’s best to pay as much as you can as soon as possible to limit penalties and interest. 

Are there penalties for filing my taxes late?

Yes, the IRS will impose penalties if you file your taxes late. These penalties are essentially financial disincentives to ensure taxpayers file and pay their taxes on time. Note that if you’re eligible for a refund, you will not incur the penalty for filing late. Here’s a simplified breakdown:

How much is the penalty for filing my taxes late?

If you file your taxes late, the IRS charges a penalty calculated as a percentage of the amount of tax you owe. This penalty typically starts at 5% per month and can go up to a maximum of 25%. However, if you’re late to file your returns by over 60 days, you’ll incur a penalty of either $485 or 100% of the unpaid tax, whichever is less.

What are the penalties for paying my taxes late in addition to filing late?

The failure to pay penalty ranges from 0.5% to 25% of the unpaid taxes for each month or part of a month the tax remains unpaid. However, if both failure to pay and failure to file penalties are applied together, the amount of the late filing penalty is reduced by the late-payment penalty for that month.

What happens if I file my tax return late but pay my taxes on time?

If you file your tax return late but pay your taxes on time, you’ll be in a better position than if you hadn’t paid at all. Remember the IRS charges a late-filing penalty based on the amount of unpaid taxes. So, if your taxes are already paid in full, this penalty could be $0.

However, remember to always file your returns even if you’ve paid all the taxes owed. Failure to file in this case could lock you out of potential refunds from the IRS.

Are there any ways to avoid or reduce the penalties for missing the tax deadline?

Yes, there are several ways to avoid or reduce the penalties the IRS will impose on you for missing the income tax deadline. 

  1. File as soon as possible since the longer you wait to file your late returns, the more your penalties and interest add up.
  2. Pay as much tax owed as you can (even if you can’t afford to pay in full) as soon as possible to limit penalties and interest.
  3. Apply for penalty abatement with the IRS, which can remove or reduce the penalties if you have a reasonable cause for late filing.
  4. Dispute the penalty if you disagree with the amount you owe. You can call the IRS or send a letter. For assistance with this process, consult with a tax professional.
  5. Increase withholding or make estimated quarterly payments to avoid underpayment penalties in the future.
  6. Set up a payment plan with the IRS if you can’t pay all your taxes and/or penalties immediately.

What should I do if I can’t afford to pay my taxes?

If, for any reason, you’re unable to pay your taxes, the IRS offers several options to help you meet your tax obligations:

  1. File your tax returns before the deadline lapses, even if you can’t pay the tax owed in full. This ensures you avoid the failure-to-file penalty.
  2. Pay as much tax as you can to reduce the amount of interest and penalties that will accrue on your unpaid taxes.
  3. Consider payment options offered by the IRS, allowing you to manage your tax debt. 
  4. Consult tax professionals if you’re unsure about what to do. Our team can provide guidance and advice tailored to your specific situation.

Can I set up a payment plan with the IRS if I owe taxes?

Yes, the IRS offers online payment plans and installment agreements (IA) if you owe taxes and aren’t able to pay in full immediately. The online payment plan offers both short-term (payment period is 120 days or less) and long-term (payment period is longer than 120 days, paid in monthly payments) payment plans. But if you don’t qualify for the IRS online payment plan, you can fill out Form 9465 – the Installment Agreement Request.

Note that your choice of any of these options largely depends on the amount of taxes you owe combined with penalties and interest. Always consult a tax professional to help you determine which IRS payment plan is optimal for your tax situation.

Can I get my tax penalties forgiven?

Yes, the IRS may provide penalty abatement under specific circumstances. Whether it’s failure to file, failure to pay, or failure to deposit penalties, you may primarily qualify for an abatement if you have a history of good tax compliance. You may also qualify if you weren’t able to fulfill your tax obligations due to reasonable circumstances beyond your control, and not in bad faith. 

Also note that if you receive a notice or letter from the IRS, first verify that the information is correct and the penalty is just. If incorrect, follow the instructions in your notice or letter, and if you can resolve the issue, a penalty may not apply. If you aren’t sure whether your penalties can be forgiven by the IRS, consult tax professionals for IRS representation.

What are the long-term consequences of missing the tax teadline?

The most immediate consequence of missing a tax deadline is the accumulation of penalties and interest, which you’ll end up owing more if you wait longer to file. In the longer term, these are the consequences of missing the tax deadline:

  1. Audit triggers if you continually fail to file and pay your taxes on time. Also, if your returns deviate significantly from these norms, you are more likely to be audited.
  2. Difficulties obtaining financial loans since financial institutions require that you submit copies of filed tax returns must loan approvals.
  3. Civil fraud penalties in severe cases when the IRS believes that you have intentionally failed to report income.
  4. Criminal Prosecution in extreme cases of tax evasion or fraud.

What happens if I don’t file my taxes at all?

While everyone isn’t required to file their taxes, here’s what will happen if you don’t file your taxes at all when you are obligated to file them:

  1. Penalties and interest: The IRS imposes a failure-to-file penalty between 5% and 25% if you don’t file your tax return by the deadline.
  2. Substitute for return: If you don’t file your taxes, the IRS may file a substitute return for you, which won’t include any additional exemptions or deductions that may be eligible for, resulting in you owing more taxes. The IRS will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment.
  3. Collection and enforcement actions: When you fail to file your returns and the IRS files a substitute return for you, the tax bill from the proposed assessment will trigger the collection process if you don’t pay it.
  4. Loss of refund: If you’re due a refund from the IRS, you must file a return within three years of the due date or you may forfeit your refund and not get to receive it.
  5. Criminal charges: In extreme cases, such as tax evasion or fraud, not filing your taxes could result in criminal charges.

Not everyone is required to file their tax returns, especially if your income is below a certain threshold. However, if you’re eligible for a refund or credits, you should still file a return.

What resources are available to help me file my taxes if I missed the deadline?

If you’ve missed the tax deadline, there are several resources available to help you file your taxes:

  1. The IRS Free File provides free online tax preparation and filing options on IRS partner sites.
  2. Payment Plans: If you owe taxes but can’t afford to pay the full amount right away, the IRS offers online payment plans and installment agreements.
  3. IRS Offer in Compromise program which allows eligible taxpayers to settle their tax obligation for less than the full amount owed.
  4. Tax Professionals, including CPAs, Enrolled Agents (EAs), and tax attorneys, provide expert and tailored assistance depending on our tax situation.
  5. Low-Income Taxpayer Clinics (LITCs) assist low-income individuals with settling tax disputes with the IRS, and they also provide education and outreach programs. 
  6. Taxpayer Advocate Service, an independent organization within the IRS, can offer assistance, especially if fulfilling your tax obligations may cause undue financial burden.
  7. MilTax, a Department of Defense program, offers free return preparation and e-filing software for all military members, and some veterans.

How can I prevent the IRS from tarnishing my wages due to unpaid taxes?

If you’re facing the possibility of wage tarnishment, especially if the IRS issues collection and enforcement actions due to unpaid taxes, there are several strategies you can use to prevent this from happening:

  1. Paying your tax debt is the most direct way to stop wage tarnishment.
  2. Establish a payment plan with the IRS if you can’t immediately settle the taxes and penalties you owe.
  3. Submit an Offer in Compromise if you’re eligible.
  4. Claim hardship if wage tarnishment is causing you significant financial problems. The IRS will stop the tarnishment if you can prove that it is creating an immediate economic hardship.
  5. Consult a tax professional for IRS representation and negotiate with the IRS on your behalf if you’re dealing with unpaid taxes and wage tarnishment.

Conclusion: Should I hire a tax professional to help me deal with a missed tax deadline?

Hiring a tax professional may not be necessary for everyone. Ideally, if your tax situation is straightforward and you’re comfortable handling it by yourself, then you don’t necessarily need to hire a tax professional. 

However, if you’ve missed the income tax deadline and find yourself with a more complex tax situation, then it may be beneficial to schedule a consultation with a tax professional to discuss your options. While this guide is thorough, it isn’t a substitute for a professional’s personalized advice. Here are some reasons why you might consider hiring a tax professional:

  1. Expertise: Tax professionals have the knowledge and experience to deal with all tax situations within the law, and they can tailor their advice to suit your particular needs.
  2. Time-saving: Dealing with tax issues can be time-consuming, but with tax professionals, all the paperwork and communication with the IRS are seamless, saving you time and stress.
  3. Negotiation: If you owe a significant amount in taxes or face potential wage tarnishing, a tax professional will represent you to the IRS and negotiate with the IRS on your behalf. They can help set up a payment plan, submit an Offer in Compromise, or even get penalties abated or reduced in some cases.
  4. Prevention of future issues: A tax professional can provide advice on how to avoid missing future tax deadlines and keep your taxes in order.
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Manay CPA is a reputable, full-service CPA firm based in Atlanta, Georgia. Founded in 2001, we provide comprehensive accounting and tax solutions to individuals and businesses across all 50 states.

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